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The Economy is Slowing but Mortgage Rates Will Fall?
According to the Mortgage Bankers Association’s latest forecasts, the economy is expected to slow towards the end of this year and enter a mild recession in 2024. This will lead to a rise in unemployment to around 4.9%. As people lose jobs, inflation is expected to come down. As a result, the MBA doesn’t foresee the Federal Reserve raising interest rates anymore.
This outlook of cooling inflation is good news for mortgage rates. Despite some upward pressure on long-term rates from events abroad and concerns about US debt, mortgage rates should decline gradually by the end of 2023 as inflation uncertainty recedes and the economy slows. The spread between mortgage rates and Treasury yields is expected to narrow as volatility settles down.
So mortgage rates are expected to come down soon, enough to help many potential homebuyers. But not everyone.
As mortgage professionals, we analyze economic reports, rate movements, inventory, guidelines changes and more. But none of it matters if we don’t change our own actions.
My own business is not where it needs to be. I can’t just wait for the market to save me. I need to make changes now to get back on track.
What will you change when rates fall? Will you keep doing what hasn’t worked and expect different results? The market is not likely to bounce back to the boom times anytime soon. If you’re waiting to change, lower your expectations. The turnaround will be gradual when it comes.
According to the MBA, mortgage volume is expected to decrease 26% in 2023-2024. Purchase volume will fall 15% and refinances 55%. They expect you to close fewer loans. Does knowing this change your plans?
The truth is, going back to “normal” is a fantasy. The old strategies won’t work in this new environment. The time to act was years ago. Today is the second best time. Tomorrow will be too late.
The economy may be slowing, but by taking action now, you can position yourself to capitalize when homebuyers return. What specific steps will you take starting today? The market won’t save you – only you can save you.
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